Download Online WOM Marketing and the Application of Its Strategy

Online WOM Marketing and the Application of Its Strategy
SHEN Xiuqing1, GUO Haiqing2
1. School of Business, Inner Mongolia Finance and Economics College, Huhhot, 010051, China
2. Inner Mongolia Agricultural University, Huhhot, 010018, China
Abstract: The prevalence of Internet Word-of-mouth caused the concern of both consumers and
marketers. WOM marketing has been new development by network. The spread of Internet
word-of-mouth has its own characteristics compared with that of traditional, and provides a new
opportunity to the enterprises. This paper first expounded the conception of Internet word-of-mouth and
its mode of transmission, and then discussed the transmission of online word-of-mouth. With the start of
improving the reliability of Internet Word-of-mouth, the author explored the strategy for enterprises to
develop Internet WOM Marketing.
Keywords: WOM Internet WOM WOM marketing Transmission of WOM
1 Theoretical background
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1.1 The traditional conception and the characteristic of WOM
The WOM, in Encyclopedia of CiHan is explained “Public verbal praise”. Soderlund 1998 notes
that WOM is “Customers tell friends, family or colleagues of an event, thereby creating a certain degree
of satisfaction”; Gabrie lallejo 2006 defines WOM from a marketing perspective, states that WOM is a
designed marketing approach to stimulate consumers talking about brands, products and services. The
transmission of WOM plays an important role in the process of information collection, evaluation and
the decision to buy, and WOM has often been seen as the most important and the most frequent use of
external sources of information, WOM marketing is also the preferred marketing strategy by enterprises.
Katz and Lazarsfeld 1955 find WOM is the most important factor to impact consumers on buying
household goods and food, and its influence in Conversion of consumer brand is seven times as the
news and magazines, four times as the marketing staff, 2 times as the radio advertising, in the
promotion of consumer attitudes from negative, neutral to positive changes, the function of WOM is
nine times as the ad. In addition, Engel Black-well and Kegerreis 1969 argue about 60 percent of the
respondents think that WOM is the most influential decision-making sources of information.
WOM can have a tremendous impact on the consumers for the characteristics below. First, it is
high authentic. The credibility of WOM is the key to power. Silveiman 2001 believe that the power of
WOM roots in its credible and independent, and this could provide consumers with credible indirect
consumer experience and reduce the risk of consumer purchases; Secondly, the way WOM information
flows is not one-way as advertising, but two-way, that is, ask questions at any time in the process of
communication, to get the essential information; Thirdly, WOM is more dynamic, more easily
remembered by consumers; Finally, compared to other means of marketing, WOM is small cost, large
output, high efficiency and low risk.
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1.2 Internet WOM and its mode of transmission
With the development of the internet, increasing consumers publish own views and comments on
the Internet about the brands, products, services, companies and related incidents, WOM also broke the
traditional forms of oral communication, generated a new form by the internet-- online word-of-mouth..
Online word-of-mouth is a new form which is through the use of the Internet. The existing involved
from the books, CD, cars, film and housing to a very wide variety. At the same time consumers are more
and more dependent on the Internet to obtain information, online WOM searching has become a new
hotspot. The survey Dobleeclick made in 2004 on 5500 internet users shows that 44 percent of the
respondents claimed that they would consult on site before buying, and 59 percent of the consumer
shares the opinion that the expert's views are less useful than the consumer’s. Cnnic’s survey in July
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2006 also shows that 39.5 percent of consumers access to information through the internet. The
prevalence of online WOM make internet WOM Marketing become a hot business concern, the
enterprises attempt to use online WOM as the new marketing tool to influence consumer’s purchasing
decisions.
The transmission of online WOM can generally be divided into two types, first, synchronous
communication, that is, people in communication maintain consistency in time, for example, chat rooms;
the second is asynchronous transmission, that is, people can exchange ideas not need to online at the
same time, e.g. BBS, Email. The transmission process starts with a comprehensive test, and deepening
gradually. It mainly to exchange text, and has characteristics of widespread, accidental, anonymity and
multiplicity (PengLan, 2001).In the internet, WOM transmission may occur not only between the
acquaintances (e.g. Email), but also occur between people who are not familiar with or even strangers
(News group, chat room and BBS). The most different between online WOM and the traditional
transmission is that the boundary between commercial and non-commercial is blurred. Manufacturers
can easily anonymous disguise as the general public, disseminate commercial information, and promote
their products. The recipients usually don’t consider the source and the reality of the content, this make
the transmission more accidental.
Though, WOM is a marketing tool for a long history, the domestic research taking it as a marketing
law has just begun (LiJian 2007), with the Internet growing power of information dissemination, online
WOM has gained much concern of many academics at home and abroad, and has made many
achievements(Hanson 2000). However, national research about online WOM is little, the achievement
on how to use it through the internet by enterprises is still less. This paper attempts to describe the
characteristics of online WOM marketing, and accordingly points out the strategy available for the
enterprises.
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2 The transmission traits of online WOM
Specifically, the transmission traits of online WOM are below.
2.1 High efficiency of dissemination
In the information age, as the important of information to value creating emerges, information itself
becomes a valuable product and service. Enterprises are required not only able to get the accurate
information they need, but also send their information accurately to the target. However, no matter
enterprises to adopt a "push" or "pull" strategy for information transfer, they still send the one-way
information to the consumers by means of “you listen to me”, but what the consumers really need is
obtaining essential genuine information rapidly. To meet this exigent require, online WOM marketing,
which characterized by two-way interaction and be true as the keynote born, and be the new form of
online marketing which is preferred by the enterprises and welcomed by the consumers. By internet,
people-to-people exchange has broke the limitation of space, face-to-face communication can be
possible even in different places, this make the transmission efficiency of online WOM improve greatly.
Further, network blurs the boundary between the individual and the general public; individuals can
therefore apply the network to various levels of communication.
2.2 Large amount of information dissemination
It is a good channel to make the information between the business and the client more symmetrical,
for business individual consumer is weak, there is serious information asymmetry. Through the Internet
information and communication technologies and platforms, and by reading other consumers WOM
information, the opening up information of government, the interactive information of enterprises,
consumers can gain more, and are easy to obtain the real information by comparison, filtering. More
symmetrical information allows the consumers be on the status of the initiative, have a greater say;
decision-making will be more successful and effective.
2.3 The anonymity of transmission
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The process of WOM transmission will be interfered by some factors in the real world, for example,
the identity and the status of the exchanger. Advent of the Internet eliminates the different of social
hierarchy; the communication becomes more equal and pure. The high anonymity of the network broke
the restrictions of the traditional social status on the dissemination of communication; the
communication which can not be carried out in the real environment originally can easily be achieved
on the Internet. Two effects generate, one is the anonymity of the network brings the elimination of
social class differences, people can communicate more equal and more pure by the internet. The
network provides the so-called publicsphere, which make the transmission of WOM closer to “Acts of
communication”, defined by Habermas (1999). The other is that the anonymity leads the communicators
less bound by the norms of the community, the process is free, and the Credibility is reduced. Therefore,
network has become the source of many rumors, and because of the traits of rapid and convenient,
internet rumors have increasing influence on both manufacturers and consumers.
2.4 Diversification of forms of communication
In the Internet environment, the existing forms of information transmission are various. Users can
both conduct one-to-one transmission (e.g. Instant messaging), and conduct one-to-many transmission
(e.g. Mailing list), and also conduct many-to-many transmission (e.g. chat room, BBS). This trait makes
the scope and speed of online WOM are much higher than the traditional way.
3 The application of online WOM marketing strategy
Online WOM marketing is increasingly becoming public relations and marketing tools the
enterprises pursuit. The latest report “WOM marketing” completed by U.S. market research Company
and WOMMA (Word of Mouth Marketing Association) has revealed the enormous power of WOM
marketing on line. The report estimates that more than half of all online sales staff will use some form of
WOM marketing and viral marketing, and this number will continue to rise. Comsenz joint iResearch
issued “Third report on China's Internet community” in 2007; it shows that 61.7 percent of netizens will
first consider the views of netizens before purchase products, according to the Online Community (e.g.
BBS, Blog), netizens views is in the first habitat in all purchases, and has become the first element in
impacting the users’ activities. In the implementation of WOM marketing, enterprises must pay attention
to the following points.
1 From the perspective of the enterprise's competitive edge and marketing philosophy, the
competitive advantage of enterprises is based on the ability to provide outstanding value for consumers,
businesses and community. Quality is the life of business, and it’s the fundamental criteria of business
management, only good quality assurance can the user satisfaction and willing to recommend to others.
The quality of products sold to consumers is the most long-term and the most valuable things, and a
necessary condition to create a good reputation, it is necessary for the business to provide consumers
with high quality products and a good product experience. Moreover, some characteristics of the product
itself may also stimulate the transmission of WOM, for example, innovative products; honorable
products; extremely cheap products; attentive service products and easy-to-use products.
2 Strengthen the “dissatisfaction-oriented” corporate culture management. From the image, Modern
Marketing is merely the application and the mix of marketing strategy; it is an economic act, but from
the deep sense it’s the result of culture operation, a reflection of corporate culture. Handle actively and
properly the consumers’ information of "dissatisfaction”, is an extremely important component of
marketing. It is not only the function of marketing departments, but the responsibility to all sectors of
the enterprises. The “dissatisfaction-oriented” corporate culture management will inevitable strengthen
the marketing of the enterprises. The businesses who wish to convert negative WOM information to a
benefit one rely on their own integrity and quality improvement, rely on the actual action of probation,
for instance, establish networks of consumer complaints, and deal with consumer complaints effectively.
Correctly handle the discontent of consumers will move and satisfy customers, and therefore increase
their confidence and loyalty, and to be a driving force to provide positive WOM.
3 In the activities of online WOM marketing, positive reputation transmission should be effective;
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the negative one should be avoided. Arndt 1967 pointed out that positive WOM is likely to deepen the
impression of the brand, and then consumers will have purchase intentions. Positive reputation can
change some original impression of poor ideas, and make consumers have higher cognitive, even let the
consumers have a commitment to the product or the brand Bristor 1990 .D.S.Sundaram and Cynthia
Webster (1999) have a research on the relationship among brand awareness, types of WOM and
consumer brand attitude by using the method of empirical studies, the result shows that no matter is
familiar with the brand or not, if the brand has a positive WOM in public, the public is also positive to
the brand; to those which are not well-known, the positive reputation is particular important. WOM is a
double-edged sword, which not only can benefit enterprises, but also can damage the brand image.
Whether to the transmission speed or the range of being affected, negative WOM transmission is far
more than positive one. Statistics show that each satisfied customer will tell three people with their
happy experience, but the dissatisfied customer will tell the unhappy experience to at least eight people.
The recent literature even states that when consumers are not satisfied with the service experience,
transmission will reach 28, that is, when companies provide a poor service, there will be an average of
29 people that even have a negative impression of the enterprise; things will be more serious on internet.
All of these surveys have indicated that the negative impact on the brand of the poor reputation is much
higher than the positive impact on the brand of the good reputation. For the discontented customers, the
success rate of appeals determines whether he give a chance to enterprise to solve the problem or
compensation, or directly spread a lot of negative reputation. If the enterprises solve the problem quickly,
then the customer may spread positive WOM.
4 In online WOM marketing activities, enhancing the reputation of credibility should be considered
to be the starting point. High credibility is the characteristic of the traditional WOM, but for online
WOM, the credibility is a real problem. In the process of transmission, the two sides are not clear, it’s
difficult for consumers to judge whether the information disseminators have commercial purposes.
Actually, many businesses publish the reviews benefit to themselves on internet masked as a customer.
Interpersonal trust is low on line. To improve the reliability of online WOM, the following aspects can
be done. (1)The content of the WOM information which the enterprises release should be true, providing
false information is not allowed, in addition, information should be specific and clear other than vague
or abstract. (2) As Consumers believe the sites which are relied on highly and more useful, the enterprise
should understand the internet using habits of consumers who positioning by the company, pay attention
to these sites on the release of the WOM information, and take the appropriate marketing strategy. (3)
Companies may guide the consumers to release their reviews on the platform of high credibility, so as to
effectively influence other consumers.
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4 Conclusion
Although WOM marketing afford enterprises a cheap and effective marketing tool that can arouse
the concern and participation enthusiasm of many consumer and is conducive to enhancing corporate
image and brand reputation, online WOM marketing has its own characteristics. Only deeply understand
the new features of WOM marketing in the information age, and strive to improve the credibility of
network WOM, can effective WOM marketing activities carried out. Before WOM marketing, the
enterprise should commit to providing high-quality products or services, associated with the
characteristics of consumer WOM transmission, combine the brand praise and trust with WOM
transmission activities, make the consumers the “Obligations propagandists” and “Free consultants” for
the enterprises, to achieve the purpose of improving product quality, enhancing corporate visibility and
reputation and promoting sale.
Reference
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Foundation: New York, 1967
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Innovation?”, Journal of Advertising Research, 9(4), pp.3-8, 1969
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Health Care Marketing, l5 (3), fall, pp.:54-58, 1995
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